New York City is investigating allegations that Covenant House, the largest local provider of shelter to homeless teenagers and young adults, has been inflating the number of people it serves and has not been complying with the terms of its contracts with the city.

The Department of Youth and Community Development opened an investigation on May 8.

“The city takes any allegations very seriously,” Mark Zustovich, a department spokesman, said in a statement, “and we immediately began a comprehensive review of the organization’s operations to ensure fiscal integrity and the safety and well-being of the young people they serve.”

In response to the allegations, the city’s Economic Development Corporation has slowed the process of selecting a developer for a project that is to include a new national headquarters for Covenant House.

The scrutiny of the organization was prompted by an anonymous complaint filed in April to Covenant House’s internal ethics hotline. A copy of the complaint was obtained by The New York Times.

Perhaps the most significant allegation of fraud was that youths were counted more than once if they returned for shelter services. Covenant House says on its website, “In New York alone, we serve close to 4,000 young people each year,” a claim the complaint called “patently false.”

Covenant House said that of those 4,000 people, just over half are new to the nonprofit, while the rest had previously stayed at Covenant House and then returned.

Marcia Horowitz, a spokeswoman for Covenant House, said the nonprofit did not consider young people returning multiple times to be “an indication of failure.” On the contrary, she said, Covenant House “views a youth’s return to be a reflection of a youth’s level of comfort” with the organization’s programs.

According to the complaint, employees believe that Creighton Drury, who stepped down as executive director on Monday to focus on the development project, “has inflated these numbers willfully and intentionally to secure” the development deal with the city.

When the city’s economic development arm and Covenant House announced that they were jointly seeking bids from developers, Mr. Drury said the project would help end waiting lists for young people.

But the waiting lists are not as long as Mr. Drury says, according to the complaint, and Covenant House needs to focus on helping young homeless people “exit successfully.”

Mr. Drury did not respond to requests for comment. In January, Mr. Drury stood alongside Mayor Bill de Blasio, a Democrat, when he announced the city would add 300 beds for youths over the next three years. Covenant House, which added 76 beds in 2014, seemed an ideal backdrop for the announcement, as the city held a series of news conferences about efforts to reduce homelessness.

The complaint, however, said Covenant House had opened only 50 new beds while receiving funding for 76, an assertion that Ms. Horowitz denies.

The boards of Covenant House International and Covenant House New York have hired a law firm, Cravath, Swaine & Moore, to conduct an investigation, Ms. Horowitz said.

Ms. Horowitz said the nonprofit could not comment “in detail” on Cravath’s investigation but said the firm has found no evidence so far that the nonprofit is not in compliance with contracts or that residents’ safety is at risk.

The Economic Development Corporation has been fielding proposals for the development, which, in addition to a new Covenant House headquarters, might also include 700 apartments at 41st Street and 10th Avenue in Manhattan. Proposals were to outline how developers could make 40 percent of the apartments affordable and designate 75 to 100 apartments for formerly homeless people.

But on Tuesday, the development corporation said no decision was imminent. “We have learned that certain allegations have been made against Covenant House, and we do not plan to make a developer selection until the facts are more fully known,” Anthony Hogrebe, a spokesman for the agency, said.

In a note to “friends” of Covenant House last week, the nonprofit’s president and chief executive, Kevin Ryan, said developers had submitted bids for the project and Mr. Drury had requested to transition from his job as executive director “in order to devote his full-time energy” to the new headquarters.

Nancy Downing, a longtime employee of Covenant House who most recently served as general counsel, has been named the new executive director, a shift that Ms. Horowitz said was not related to the investigations.

On Tuesday, Covenant House expressed confidence in Mr. Drury. “Even if the redevelopment project does not proceed — and that is a very big if — Covenant House is moving forward with the development of a new site, and Mr. Drury is leading that effort,” Ms. Horowitz said.

Correction:

An article in some editions on May 18 about claims that Covenant House, a youth shelter, had inflated the number of people it serves misstated the status of funding it receives from New York City, using information from city officials. The city has continued to make payments on its contract with the organization; funding has not been suspended.

A version of this article appears in print on , on Page A19 of the New York edition with the headline: City Investigating Shelter for Youths Over Accusations It Inflated Numbers. Order Reprints | Today’s Paper | Subscribe